Calculate the firm interest tax savings

Assignment Help Finance Basics

Reference no: EM131967672

Question: Dharma Supply has earnings before interest and taxes (EBIT) of $552000, interest expenses of $328000, and faces a corporate tax rate of 35 percent.

a. What is Dharma Supply's net income?

b. What would Dharma's net income be if it didn't have any debt (and consequently no interest expense)?

c. What are the firm's interest tax savings?

a. Dharma Supply's net income is $___. (Round to the nearest dollar.)

b. If it didn't have any debt, Dharma Supply's net income is $___. (Round to the nearest dollar.)

c. The firm's interest tax savings are $___. (Round to the nearest dollar.)

Reference no: EM131967672

Questions Cloud

What are the irr andeturns to the developer and the fund : A developer puts in 5% equity and a fund puts in 95% of the equity for a development deal. Cash flow is to be distributed with the following order of priorities

The cash option payout : Winners of the Georgia Lotto drawing are given the choice of receiving the winning amount divided equally over 19 years or as a? lump-sum cash option amount.

What is the current value of the bond in given case : Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar.

When put option is exercised : When a put option is exercised, the. Which of the following now rivals email in many companies?

Calculate the firm interest tax savings : Dharma Supply has earnings before interest and taxes (EBIT) of $552000, interest expenses of $328000, and faces a corporate tax rate of 35 percent.

Produce some of the best coffee beans in the world : You are the president of Hawaiian Caffeine Inc., (HC). You produce some of the best coffee beans in the world because of the rich volcanic soil of the islands.

What is the percentage increase in eps : Dexter's is an unlevered firm with a total market value of $348,000 with 20,000 shares of stock outstanding. The firm has expected EBIT of $27,500.

Content creation and sharing : Using your authors' insight detail how to market with podcasts, blogs, webinars, and video streaming.

Companies take advantage of low interest rates to issue bond : Draw two bond demand - bond supply diagrams with the US Government Security market on the left-hand side and the corporate bond market on the right-hand side.

User Account

All Pages